Paris/ Madrid The telecommunications groups Orange and MasMovil are drawing consequences from the fierce competition of the four providers so far with a billion-dollar merger in Spain. The French company Orange and its Spanish partner MasMovil announced on Saturday that both sides would have an equal stake in the new company worth 18.6 billion euros. The French company is contributing its Spain business to this. The transaction is expected to be completed in the first half of next year at the latest.
The project requires an antitrust clearance from the EU Commission, which is usually critical of such mergers. According to its own information, Orange has a pre-emptive right to the shares of the planned joint venture held by MasMovil.
In the longer term, an IPO of the new company is also possible. The two companies announced in March that they were in talks to merge their Spanish businesses. These negotiations have now resulted in a binding agreement.
The merger will create a new fixed-line and mobile communications giant in the fourth largest EU country by population, which should better stand up to the previous market leader and original monopolist Telefonica. The British provider Vodafone would slip to fourth place in Spain. However, according to industry experts, he, like his competitors, could benefit from a slowdown in the price war. According to the regulator, the Telefonia brand Movistar has so far held a share of 28 percent in the mobile communications market, Orange 23 percent, Vodafone 22 percent and MasMovil 21 percent.
Fierce price battles, high mountains of debt and billions of investments in the 5G expansion are causing telecommunications companies all over Europe to create trouble. This is why consolidation is being considered more and more frequently in the industry.
Analysts believe that mergers are also possible in Italy, Portugal and the United Kingdom, among others. Due to antitrust hurdles, the entire industry is now looking forward to seeing how the EU Commission reacts to the Orange and MasMovil project in Spain.
In the planned merger, Orange’s Spain business will be valued at 7.8 billion euros and MasMovil at 10.9 billion euros. The combined turnover amounts to more than 7.3 billion euros, the operating profits add up to more than 2.2 billion euros. The main shareholder of Orange is the French state, which holds 23 percent of the shares. MasMovil is majority owned by the financial investors KKR, Providence and Cinven.